· EBITDA reaches a record of $46 million, or $0.58 per share, and was up 56 percent year-over-year

· Cash from operating activities reaches a record of $45 million

· Cash and short-term investments of $289 million as of Dec. 31, 2009

AUSTIN, Texas – Jan. 26, 2010 – National Instruments (Nasdaq: NATI) reported quarterly revenue of $202 million, which represents a 22 percent sequential increase and is flat year-over-year. Orders returned to year-over-year growth in Q4, up 2 percent, and the average order size reached a new quarterly record of approximately $3,800. Revenue growth in the quarter was lower than year-over-year order growth due to a record $8 million net increase in deferred revenue, primarily resulting from strong sequential growth in software sales in Q4, which is expected to benefit revenue in future quarters.

Q4 2009 operating income and non-GAAP operating income both set quarterly records. Operating income was $36 million, a 65 percent increase over Q4 2008. The non-GAAP operating income of $42 million was up 50 percent compared to Q4 2008, and represents a non-GAAP operating margin of 21 percent. The company’s non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles.

“While 2009 presented one of the most difficult economic environments in company history, our investments in R&D and field sales and the strength of our execution throughout the organization allowed National Instruments to recover rapidly, outperform the industry and position ourselves well for long-term success,” said James Truchard, NI president, co-founder and CEO. “I would like to congratulate our employees for making National Instruments one of FORTUNE’s 100 Best Places to Work for an 11th consecutive year and to thank everyone in the company for their expense management and commitment to innovation throughout 2009.”

In Q4, NI virtual instrumentation and graphical system design product sales, which constitute the majority of the company’s product portfolio, were up 23 percent from Q3 2009. NI instrument control product sales, which represent approximately 7 percent of NI revenue, were flat year-over-year and were up sequentially for a second quarter. NI CompactRIO hardware, modular instruments and academic products all set quarterly revenue records in Q4. The strong sequential increase in NI instrument control revenue in Q4 indicates that the overall test and measurement industry likely continued the sequential recovery that began in Q3. Product revenue was $188 million, up 1 percent from Q4 2008, and software maintenance revenue was $13 million, down 11 percent year-over-year.

Geographically, revenue in U.S. dollar terms for Q4 2009 compared to Q4 2008 was down 6 percent in the Americas, down 3 percent in Europe and up 15 percent in Asia. In local currency terms, revenue was up 1 percent in Europe and up 10 percent in Asia.

In Q4 2009, the company incurred a non-cash tax charge related to an opportunity benefit created by a new corporate income tax law in Hungary, which became effective on Jan. 1, 2010. Under the new law, National Instruments will receive a double tax deduction for qualified R&D expenses starting in 2010. As a result, NI has taken a non-cash charge to write off $21.6 million in other tax assets that NI had on its balance sheet related to Hungary but now does not expect to use. The $21.6 million charge reduced both the company’s GAAP and non-GAAP earnings per share (EPS) by $0.28. For historical comparison, note that in Q4 2007, NI recognized an $18.3 million non-cash tax credit related to its Hungarian operations.

Including the impact of the $21.6 million, or $0.28 per share non-cash tax charge, net income for Q4 was $2.4 million, with fully diluted EPS of $0.03, and non-GAAP net income was $9.7 million, with non-GAAP fully diluted EPS of $0.12. A reconciliation of the company’s GAAP and non-GAAP results is included in this earnings press release.

The NI commitment to innovation and customer success is evident in the continued growth in R&D and field sales, which were up by 63 people in 2009. As of Dec. 31, total headcount was 5,120, a 1 percent year-over-year decline.

Cash flow from operations continued to be strong at $136 million for the year. As of Dec. 31, 2009, NI had $289 million in net cash and short-term investments, up $12 million from Sept. 30, 2009. During Q4 2009, the company paid $9 million in dividends and used $16.4 million to repurchase 574,000 shares of its common stock at an average price of $28.55 per share. During the difficult two years since the start of the recession in December 2007, NI generated $257 million in net cash provided by operating activities, paid out $72 million in dividends and used $138 million for the purchase of 5.6 million shares of NI common stock at an average price of $24.89 per share.

National Instruments announced that its Board of Directors approved an 8 percent sequential increase in the quarterly dividend to $0.13 per share. This dividend is payable on March 1, 2010, to shareholders of record on Feb. 8, 2010.

· NI named to FORTUNE magazine’s 100 Best Companies to Work For list for 11th consecutive year

Full-year 2009 revenue was $677 million, down 18 percent year-over-year in U.S. dollar terms. Including the impact of the $21.6 million or $0.28 per share non-cash tax charge, annual net income was $17 million, with fully diluted EPS of $0.22, and annual non-GAAP net income was $36 million, with non-GAAP fully diluted EPS of $0.47.

Guidance for Q1 2010

“We are very pleased with the rapid recovery in our business despite the continued severe weakness in industrial capacity utilization,” said Alex Davern, NI CFO. “Our goals are to maintain the market share gains we have achieved in the recession and to focus on delivering significant operating leverage in the recovery. Our guidance anticipates significant year-over-year revenue and profit growth in Q1, with the midpoint of both revenue and earnings per share guidance, representing new all-time records for a first quarter.”